It’s been nearly two months since the United States Supreme Court struck down the Defense of Marriage Act, but there are still many things we don’t know when it comes to how this affects the taxes of couples in same-gender marriages.
Couples Living in a Non-Recognition State
What is the federal tax status of a couple in a same-gender marriage who live in a state that doesn’t recognize their marriage? For example, a couple that has a valid marriage license from Iowa but who live in Nebraska (Nebraska has a constitutional amendment prohibiting the recognition of same-gender marriages).
The Social Security Administration recently ruled that it will only consider a same-gender married couple to be “married” for Social Security purposes if they live in a state that recognizes their marriage at the time a benefit claim is made.
But that’s SSA, not the IRS. We need guidance from the IRS.
Taxation of Benefits
Taxation of health insurance benefits has been a major issue for couples in same-gender marriages for years. This taxation should have gone away on the day of the DOMA ruling. But an informal survey of my clients indicates that most employers are still calling these benefits taxable.
It appears that most employers are waiting for further guidance from the IRS.
Additionally, taxpayers and employees may be able to file for refunds of payroll taxes withheld in prior pay periods and prior years. The IRS has, in the past with similar law changes that affect payroll, created a streamlined procedure for filing for refunds.
Again, we need guidance from the IRS.
One Spouse Has Filed, The Other Hasn’t
We also need guidance from the IRS on the following situation: one spouse in a same-gender marriage properly filed their federal tax return as a single person prior to the DOMA ruling, but their spouse’s tax return is on extension and hasn’t been filed yet.
Will that spouse be able to file as single for 2012? If not, they’ll need to file as married filing separately, or the two spouses will need to file an amended tax return as married filing jointly.
Amended Tax Returns
Some couples in same-gender marriages may have benefited from filing as married in prior years. Couples in that situation should be able to file amended tax returns for those years and claim refunds.
While there’s nothing stopping a couple from sending in those amended returns now, I am advising my clients that it’s best to sit tight for awhile until we get more guidance from the IRS on all of these issues.
Written by my Friend:
Jason T. Dinesen, LPA, EA
Dinesen Tax & Accounting, P.C. and Dinesen Tax, Inc.
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